Department of Finance and Administration Commissioner Larry Martin announced on Monday that Tennessee tax revenues were lower than budgeted estimates for the month of July. Overall, July revenues totaled $1.1 billion, which is $50.8 million more than the state collected in July of 2017, but $8.6 million less than the budgeted estimate for the month.
“Sales tax revenues recorded in July reveal healthy growth compared to the same time period last year and were higher than the month’s budgeted estimate,” Commissioner Martin said.
“State corporate tax revenues, composed of franchise and excise taxes, underperformed in the month against the budgeted estimate, as did all other tax revenue combined.
“While the month of July did not meet our budgeted expectations, the state will finish the 2017-2018 fiscal year exhibiting strong revenue growth thus exceeding the state’s conservative budgeted estimates. State revenues grew by 4.14 percent more than last year and are $343.9 million more than the established budgeted estimate. Adjusting for an additional $49.2 million added from the November 2017 funding board, total state revenues will actually finish $294.7 million more than the revised total revenue estimate. Similarly, state’s general fund revenues will have outperformed the original budget estimate by $303.7 million or by $276.4 million after adjusting for the revised estimate.”
On an accrual basis, July is the final month in the 2017-2018 fiscal year and reported revenues will be subject to final accrual adjustments that may increase or decrease the recorded cash amounts on an audited basis.
General fund revenues in the month of July were less than the budgeted estimates in the amount of $4.4 million and the four other funds that share in state tax revenues were also $4.2 million less than the estimates.
Sales tax revenues were $5.1 million more than the estimate for July and they were 6.93 percent more than July 2017. July sales tax revenues reflect retail business activity that occurred in June. For the year, revenues are $81.4 million higher than estimated. The yearly growth rate is 4.56 percent.
Franchise and excise tax revenues combined were $12.0 million less than the budgeted estimate in July, and the growth rate compared to July 2017 was negative 20.36 percent. For the year, revenues are $170.6 million more than the estimate and the year-to-date growth rate is negative 2.85 percent. However, adjusting for the one-time payments received last fiscal year and this fiscal year produces a positive underlying recurring year-to-date growth rate of 3.06 percent.
Gasoline and motor fuel revenues for July increased by 16.71 percent compared to July 2017, but they were $5.0 million less than the budgeted estimate of $101.1 million. For the year, revenues have exceeded estimates by $4.4 million.
Motor vehicle registration revenues $0.7 million more than the July estimate, and for the year revenues are $19.6 million more than the estimate.
Tobacco tax revenues were $1.3 million less than the July budgeted estimate of $23.5 million. For the year, they are $9.6 million less than the budgeted estimate.
Inheritance and estate tax revenues were nearly in line with the July estimate, but for the year, revenues are $3.1 million less than the budgeted estimate.
Hall income tax revenues for July were $0.1 million less than the budgeted estimate. For the year, revenues are $28.8 million more than the budgeted estimate.
Privilege tax revenues were $1.2 million more than the July estimate, and for the year, August through July, revenues are $28.4 million more than the estimate.
Business tax revenues were $3.9 million more than the July estimate. For the year, revenues are $23.1 million more than the budgeted estimate.
All other tax revenues were less than July estimates by a net of $1.1 million.
For the year, revenues were $343.9 million more than the budgeted estimate. The general fund recorded $303.7 million more than budgeted estimates and the four other funds $40.2 million.
The budgeted revenue estimates for 2017-2018 are based on the State Funding Board’s consensus recommendation of November 29, 2016 and adopted by the first session of the 110th General Assembly in July 2017. Also incorporated in the estimates are any changes in revenue enacted during the 2017 session of the General Assembly. These estimates are available on the state’s website at https://www.tn.gov/content/tn/finance/fa/fa-budget-information/fa-budget-rev.html.
On November 20, 2017 the Funding Board met to hear updated revenue projections from the state’s various economists. On November 27, 2017 the board adopted revised recurring revenue growth ranges for the 2017-2018 fiscal year. The current fiscal year’s revised ranges recognize growth in total taxes from a low of 2.43 percent to a high of 2.67 percent, and a general fund growth from a low of 1.16 percent to a high of 1.40 percent.
On April 19, 2018 in the second session of the 110th General Assembly, the legislature passed the 2018-2019 budget, which included the Funding Board’s current year revised ranges and also the administration’s amendment to the proposed budget. The governor signed the budget bill on July 21, 2018.
With the passage of the appropriations act, Public Chapter 1061, the General Assembly recognized in the current fiscal year an additional recurring $49.7 million in total revenue and a corresponding recurring increase in general fund revenue in the amount of $27.8 million.